Elon Musk has confirmed that Tesla has entered into a $16.5 billion semiconductor supply agreement with Samsung Electronics to support the development of its upcoming AI chips.
Samsung revealed the deal in a regulatory filing, stating it will be in effect from July 26, 2025, through December 31, 2033, according to CNBC. Although the South Korean tech giant did not initially disclose the client’s name, Musk later confirmed Tesla’s involvement on social media platform X.
“Samsung’s massive new Texas fabrication plant will produce Tesla’s next-gen AI6 chips,” Musk wrote, adding that Tesla will work closely with Samsung to boost manufacturing efficiency. He also mentioned personally overseeing the process to speed up progress and hinted that the deal could ultimately be worth more than the stated amount.
This partnership represents a major development for both companies. Samsung already manufactures Tesla’s AI4 chips and will now rival TSMC, which is contracted to build the AI5 series for Tesla.
While Samsung has kept client-specific details under wraps due to trade secret protections, it noted the agreement could be subject to changes or cancellation.
Following the announcement, Samsung’s shares jumped over 6% on Monday — their highest level since September 2024. Prior to Musk’s confirmation, Bloomberg had reported Tesla was likely the buyer.
The deal comes as Samsung pushes to expand its presence in the AI chip industry. The company plans to start mass production of advanced 2-nanometre chips and aims to attract major orders using its latest technology.
However, Samsung has lagged behind in the high-bandwidth memory (HBM) segment. SK Hynix currently dominates this space and supplies chips to Nvidia, while Samsung’s updated HBM version is now delayed until at least September.
Samsung is set to announce its second-quarter earnings on Thursday, with analysts predicting a sharp drop in profits due to weak demand in its chip manufacturing business and slower adoption of AI hardware.
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